This evening, Quiksilver filed for Chapter 11 bankruptcy. Then held a meeting in Huntington Beach Town Hall to inform employees about the developments.
Which, put featherly, is a huge bummer for a company as iconic as Quiksilver. The surf industry’s been kind to very few in the last few years. Unless you’re Nick Woodman, Pat Tenore or a similarly equipped prophet/MVP, then the climate’s been uncomfortably humid. Which isn’t to suggest any current incompetence on Quik’s behalf; Pierre Agnes is a well-intentioned and savvy gent, left with the unhappy inheritance of debt. Rocky roads require perfect footing, and one bad step… like, purchasing a ski company (Rossignol in 2004) and watching your debt grow $518 mill in one fiscal year, is more than enough to start sliding.
Before we do any conclusion-jumping, know this: The Quiksilver Pro, France ain’t going anywhere, nor are the team riders that’ve long been associated with the brand. Outwardly facing, consumer-wise and as far as brand DNA is concerned, it’s biz as usual.
But things will change internally. Oaktree Capital Management to the rescue! They’re the private equity firm with a 19.2 percent stake in Billabong. Suffice to say, they have experience in such matters. They and Quik have a plan as they head into court, but this isn’t the type of thing that runs, uh, smoothly. Guarantees? Nah uh. But, let’s assume all goes to plan…
The company will undergo reorganisation in various forms, which could include: reduction of the $800 mill-odd debt via financial big bro Oaktree converting its pre-bankruptcy debt holdings (73 percent) to become majority shareholder, the transition to Quik being a private company, the severing of distribution ties with discounters like Costco, and more. There’ll also be a decrease in store count; In the age of eComm, the need for flagships has certainly lessened.
“After careful consideration, we have taken this difficult but necessary step to secure a bright future for Quiksilver,” says Pierre. “With the protections afforded by the Bankruptcy Code and the financing provided by Oaktree, we will not only be able to satisfy our ongoing obligations to customers, vendors and employees, but we will also have the flexibility needed to complete the turnaround of our U.S. operations and re-establish Quiksilver as the leader in the action sports industry. Our fresh capital structure, with a very low level of debt for our industry, will enable us to invest in and reinvigorate our brands and products. We are confident we will emerge a stronger business, better positioned to grow and prosper into the future.”
BTW: This all only applies to Quik’s US subsidiaries. Asia-Pacific and Euro are cherry at present.
Once Chapter 11’s filed, Quik’ll let retailers and employees know that it’s going to be biz as usual. Six months on, bankruptcy restructuring process complete, and the company can get back to doing what it does best. Need a reminder what that is?
Supporting the most important surfer in history through 24 years of a career that’ll never be matched. Making some of the best wetsuits and trunks to ever exist. Plucking a kid named Dane Reynolds from a Venturan beachbreak and liberating him to feed a furiously hungry audience with zeitgeist-defining short films. Curating the most glamorous team in women’s surfing (cc: Roxy Pop Surf). Hosting World Tour events at Snapper Rocks and Hossegor. And then the rest… think gems like If You Can’t Rock and Roll, Don’t Fuckin’ Come, the Quiksilver G-Land Pro 1997, The Crossing, and more than can be listed here.
With any luck, this’ll all pass like a bad dream within a year, and what we’ll be gifted on the other side will be a redesigned culture-machine that dances to an enduring awesomeness.